Hoeldtke v. Horstman

• Decision Date: 31 March 1910
• Citation: 128 S.W. 642
• Parties: HOELDTKE et al. v. HORSTMAN et al.
• Court: Texas Court of Appeals

Page 642

128 S.W. 642

HOELDTKE et al. v. HORSTMAN et al.

Court of Civil Appeals of Texas.

March 31, 1910.

On Motion for Rehearing, May 12, 1910.

Error from District Court, Fannin County; Ben H. Denton, Judge.

Action by H. C. Hoeldtke and others against F. W. Horstman and others. From the judgment plaintiffs bring error. Judgment rendered in accordance with opinion.

J. W. Gross, for plaintiff in error Hoeldtke. G. W. Wells, for plaintiff in error Leach. McGrady & McMahon, for defendant in error Hill.

HODGES, J.

This is the second appeal in this litigation. The former is reported in 117 S. W. 217. The suit was originally instituted by Hoeldtke, one of the plaintiffs in error, against B. S. McCleary and L. C. Hill, seeking a recovery on a promissory note and the foreclosure of a vendor's lien against a tract of 57 acres of land for which the note was a part of the purchase price. Leach, the other plaintiff in error, was made a party defendant upon the ground that he held a note for $175 which was also a lien against the same tract of land. In the course of this opinion Hoeldtke and Leach will be referred to as "plaintiffs," and Hill and McCleary as "defendants."

The facts show that some time prior to 1905 the land in controversy was sold to B. S. McCleary, one of the defendants, by Horstman. The consideration for the conveyance consisted in part of two notes, one for $175, the one now held by Leach, and another for $140, afterwards held by J. E. McCleary, a brother of the vendee. McCleary was also to assume a note for $690 held by plaintiff Hoeldtke, the one sued on in this action. All of these notes recited the reservation of the usual vendor's lien against the land. In October, 1906, B. S. McCleary, grantee in the above conveyance sold and conveyed the same land to the defendant Hill. The consideration for this transfer was in part some personal property conveyed by Hill to McCleary, and the assumption by Hill of the payment of the note for $175 now held by Leach and the one for $690 owned by Hoeldtke. A vendor's lien in favor of McCleary to secure the payment of these notes was retained in the deed. In addition to McCleary's interest in this land, Hill also got in this deal McCleary's personal notes for about $500 secured by a chattel mortgage, and two other notes held by the latter for something over $200. McCleary being unable to meet his indebtedness to Hill, on July 11, 1907, they made another contract evidenced by the following written instrument: "Honey Grove, Texas, July 11, 1907. The following agreement is this day made between L. C. Hill and L. T. McCleary as follows, effective this day: L. C. Hill agrees to surrender two notes against said McCleary amounting with interest to $512; also assumes rents now due and to give McCleary an equity of $307 in land deeded him by McCleary last fall, at which time $615 equity was traded to Hill, and in return McCleary surrenders to Hill the confectionery business, fixtures, stock and all effects in the business known as the L. T. McCleary Confectionery, except his accounts. L. T. McCleary does not assume any obligations other than above stated, except taxes for 1907. Each party agrees to pay taxes on property acquired by this exchange, McCleary to have rents from the land for the year 1907." Hill also executed a deed reconveying the land to McCleary, in which was the following recitation: "Know all men that I, L. C. Hill, of Fannin county, Texas, in consideration of $1,500.00 paid by B. S. McCleary as follows: $307.50 cash in hand paid, the receipt of which is acknowledged, and the further consideration of B. S. McCleary assuming the payment of four certain vendor lien notes, two of said notes for the sum of $175.00," etc. The deed then recites a consideration just as that in the former deed from McCleary to Hill; all of the above-described notes except the L. C. Hill $307.50 note bearing 8 per cent. interest per annum, interest payable annually as it accrues, with 10 per cent. attorney's fees if placed in the hands of an attorney for collection. It is expressly agreed and stipulated that a vendor's lien is retained against the property, premises, and improvements, until the notes and all interest thereon are fully paid. There is some dispute about the delivery of this deed and its acceptance by McCleary. The jury, however, found that it had been delivered.

The case was submitted to a jury upon special issues, and in response to the questions propounded they found the following facts: That Hoeldtke and Leach accepted the promise of Hill to pay the notes held by them, as shown by McCleary's deed to Hill of October 16, 1906; that Hill did not know of this acceptance prior to July 11, 1907, the date when Hill and McCleary entered into the second contract above mentioned; that McCleary received and accepted from Hill the deed of July 13, 1907, reconveying the land to McCleary; that in making the first contract McCleary had represented to Hill that the note for $140 payable to Horstman and referred to in the deed from Horstman to McCleary had been paid; that Hill knew nothing to the contrary, and relied upon those representations. Upon these findings the court rendered a personal judgment in favor of Hoeldtke and Leach against B. S. McCleary, and for the amount of their notes, and ordered a foreclosure of their liens against the land, but discharged Hill from any personal liability for any of the obligations formerly assumed by him in the trade with McCleary. From the judgment in favor of Hill, this writ of error is prosecuted by both Hoeldtke and Leach.

The first assignment of error complains of the refusal of the court to enter a personal judgment against Hill in favor of the plaintiffs upon the answers returned by the jury. Inasmuch as we think the case should be disposed of upon this assignment, it will be necessary for us to refer to the pleadings of Hill and review at some length the facts upon which his defense rests. Hill claims exemption from personal liability on the two notes sued on, upon two grounds: (1) That he was ignorant of the acceptance by the plaintiffs of his promised assumption of these notes till after he had reconveyed the land to McCleary on July 13, 1907, in accordance with an agreement made two days before that time, and had obtained a release by McCleary's reassumption of those debts; (2) that, if he was not relieved of personal liability by that transaction, he was entitled to a rescission of the original contract on account of a fraud perpetrated by McCleary in representing to him that the note for $140, in which a vendor's lien was reserved against the land, had been paid, when in truth and in fact it had not, but was still an outstanding incumbrance on the property purchased by him. The foregoing, though less specific than the pleadings, contains the substance of Hill's special defense. Considering these in their order, the first inquiry will be as to the status occupied by Hill when he assumed the payment of the notes held by the plaintiffs when he accepted the conveyance from McCleary.

That he thereby became primarily liable as an original promisor, had his status remained unchanged by any reassumption of the payment of the same debts by McCleary in the second contract, is a proposition about which there is practically no dispute, and one which is abundantly sustained by authorities. Huffman v. Western Mortgage Co., 13 Tex. Civ. App. 169, 36 S. W. 306; Keller v. Ashford, 133 U. S. 610, 10 Sup. Ct. 494, 33 L. Ed. 667; Union, etc., Co. v. Hanford, 143 U. S. 187, 12 Sup. Ct. 437, 36 L. Ed. 118; Johns v. Wilson, 180 U. S. 440, 21 Sup. Ct. 445, 45 L. Ed. 613; 1 Jones on Mortgages, §§ 763, 764; 2 Warvelle on Vendors, § 644 et seq. See, also, this case on former appeal, 117 S. W. 217. But the fact that McCleary in the deed to him from Hill, of date July 13, 1907, did reassume the payment of the same debts, is relied upon as exonerating Hill from his personal liability. While there is some question as to the sufficiency of the evidence to sustain the finding of the jury that McCleary accepted this deed from Hill, and that there was such a delivery as completed the transfer of title, for the purposes of this discussion we will treat the finding of the jury as having settled that issue in favor of a delivery. The question then is: Did McCleary and Hill have the right, without the concurrence of Hoeldtke and Leach, to release Hill from this obligation, or to enter into a new contract between themselves alone which would legally have that effect? In other words, does the contract of the grantee of mortgaged property, who assumes as a part of the consideration of his purchase a prior debt due from his grantor, after the mortgagee has assented to, or accepted the new promise, become irrevocable without the consent of the mortgagee? The following authorities, we think, support the affirmative of that proposition: Starbird v. Cranston, 24 Colo. 20, 48 Pac. 652; Haas v. Dudley, 30 Or. 355, 48 Pac. 168; Gifford v. Corrigan, 117 N. Y. 257, 22 N. E. 756, 6 L. R. A. 610, 15 Am. St. Rep. 524; Bank v. Chalmers, 144 N. Y. 432, 39 N. E. 331; Iowa Loan & Trust Co. v. Schnose, 19 S. D. 248, 103 N. W. 22; 9 Am. & Eng. Cas. Ann. 255; Boissac v. Downs, 16 La. Ann. 187; Stockton v. Gould, 149 Pa. 68, 24 Atl. 160; Willard v. Worsham, 76 Va. 392; Field v. Thistle, 58 N. J. Eq. 339, 43 Atl. 1072; 27 Cyc. 1360, and cases cited; 3 Pomeroy, Eq. Jur. §§ 1206, 1207.

The courts are not in harmony as to the principle upon which this liability should be justified. Some of the earlier decisions are disposed to treat the assumption as a contract of indemnity made for the benefit of the mortgagor, of which the mortgagee may avail himself by right of subrogation, and that his remedy may be enforced only through an equitable proceeding. The majority of the later adjudications, and the text-writers as well, regard such an undertaking as a contract made for the...